Pharmacy retail giant Clicks’ retail revenue has been negatively impacted by delays in implementing a warehouse management system at the company’s distribution centre in Cape Town.
This emerged yesterday when Clicks published its interim financial results for the six months ended 28 February.
According to Clicks, the implementation delays reduced product availability in Western Cape and Eastern Cape stores, particularly over the festive season.
Management estimates the delays reduced retail turnover by approximately R175 million, or 0.9% of retail sales.
However, the company notes that product availability improved steadily and returned to targeted levels by the end of February.
Clicks declined to respond to ITWeb’s questions about the delays in question.
A warehouse management system is software that controls and optimises day-to-day warehouse operations, including receiving, storing, tracking inventory, picking, packing and dispatching goods.
It provides real-time visibility of stock levels and locations, helping businesses improve accuracy, reduce delays and minimise stock outs.
In 2024, Clicks opened its first omnichannel warehouse in Montague Gardens, Cape Town, as part of its digital and logistics strategy.
The facility serves as an in-house e-commerce fulfilment centre capable of processing up to 1.4 million parcels annually by integrating online and in-store operations to improve efficiency and customer experience.
Clicks adds that retail trading was further affected by aggressive competitor discounting during the festive season.
The retailer says it reached a milestone with the opening of its 1 000th store, bringing its total footprint to 1 003 stores, while its national pharmacy network expanded to 795.
Clicks ClubCard grew active membership by 800 000 to 12.9 million, contributing 83.7% of total sales.
Loyalty members received R527 million in cashback rewards during the six-month period.
Group turnover increased by 7.4% to R24.9 billion, with retail turnover – including Clicks, UniCare, The Body Shop and Sorbet corporate stores – rising by 5.4%.
The firm notes that turnover in comparable stores grew by 3.1%, while selling price inflation averaged 2.3% for the six-month period.
Distribution turnover increased by 13%, largely driven by a 31.1% rise in revenue from preferred supplier bulk contracts. Total income grew by 6.5% to R7.6 billion, with the retail margin expanding by 70 basis points due to private label volume growth.
However, the distribution margin declined by 50 basis points, impacted by a lower adjustment in the single exit price of medicines and the loss of two bulk contracts, resulting in the group’s total income margin decreasing by 30 basis points to 30.7%.
Retail costs rose by 6.1%, reflecting a 7% annual wage increase and expenses related to the warehouse management system implementation, while comparable retail costs increased by 5.4%.
Headline earnings rose by 6.4% to R1.5 billion, with basic earnings per share increasing by 8.3% to 653 cents and headline earnings per share up 8.1% to 653 cents, supported by share buybacks over the past 18 months. Inventory levels increased by 13.4%.
Meanwhile, Clicks-owned United Pharmaceutical Distributors (UPD) delivered strong growth in wholesale and preferred supplier bulk distribution turnover. However, the business remained constrained in the hospital and independent pharmacy channels.
According to Clicks, the company continued to demonstrate disciplined cost management, supported by lower electricity and fuel expenses following early investments in solar energy, battery storage and electric delivery vehicles.
It notes that UPD doubled its fleet of pharma-compliant electric vehicles to 85, with 86% of wholesale deliveries and 74% of total travel now no longer exposed to fuel costs.
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